Scott Bluestein: It’s hard to say. We think that both vehicles are obviously growth-oriented vehicles, and we demonstrated and we delivered very strong growth in the public BDC and in the private credit fund business last year. We expect that to continue to be the case based on what we’re seeing right now for 2023. I would point out that because of the unique structure that we’ve deployed here where the RIA business is operated as a wholly-owned subsidiary of the public BDC, the more successful that private credit fund business is, the better it is for the shareholders and stakeholders of HTGC.
Operator: Our next question comes from Casey Alexander with Compass Point.
Casey Alexander: Yes. I’m trying to wrap my head a little bit around the cadence of the way things look like they’re going to flow here in the first quarter. And you discussed the $150 million to $200 million of repayments as your estimate. I understand that. you had commitments in the first quarter already of $190 million, but you’ve already funded $193 million. I’m assuming that, that is some of those loans that are coming off of the unfunded commitment schedule. It would suggest, especially given that most of the time, fundings are back-ended that you would be looking at a fairly robust quarter in terms of net originations. And would that, in part, explain why you’ve already sold 2.6 million shares under the equity ATM program this quarter.
Scott Bluestein: Sure. Thanks, Casey. So first, with respect to Q1, as you know, we do not provide a gross funding projection with respect to what we expect to do. We did provide the commitment numbers. I think the way you’re looking at it, though, is the right way to think about it. The reason why the funding numbers so far quarter-to-date exceed the commitment numbers is, we’ve been able to fund a lot of capital to existing portfolio companies who hit performance milestones in the second half of last year. And those tranches were either expiring or the company has made the decision to draw that capital. I mean in the case that what we typically see happen with the companies are achieving those milestones, we’re obviously happy to fund that additional capital to borrowers where we already have the relationships.
We’re also seeing strong demand from a new business perspective, and that’s evidenced by the new commitment number and the pending commitment number. So we’re confident and we’re optimistic with respect to what that Q1 funding number is going to look like. And that does lead to, a, why we’ve been not aggressive, but why we’ve been active on the ATM quarter-to-date. And I would also tell you that, that should serve as a pretty strong signal about how we feel about portfolio growth over the course of the first half of this year.
Casey Alexander: Okay. My other question is what’s different and precipitates the usage of a letter of credit as opposed to a credit facility? Is there something different about that? Is it securitized that allows for it to be cheaper capital? Or why go in that direction? I’m not sure I ever remember a BDC actually using a letter of credit as opposed to a credit facility.
Seth Meyer: Yes. Thanks, Casey. It’s Seth here. We think it’s a pretty smart addition to our toolbox based on the fact that it’s a lot cheaper facility to put in place. We’re very grateful for SMBC working with us to put in place what we think is probably the first, unrelated letter of credit that’s been put in place. And it covers the tail end of the exposure on the available unfunded commitment. That portion, which is unlikely in any single quarter ever to be drawn down. Historically, the range has been 5% to 15% of the prior quarter’s available unfunded commitment is drawn down. So covering all of it with a higher cost credit facility doesn’t seem smart to us in the long term.
Casey Alexander: Okay. I think I get it. .
Operator: Our next question comes from John Hecht with Jefferies.
